Crypto lobby group says SEC should back off regulating most DAOs

Crypto lobby group the DeFi Education Fund and the Uniswap Foundation have said the Securities and Exchange Commission should be hands-off on regulating decentralized autonomous organizations (DAOs).

The May 27 letter to SEC Crypto Task Force lead Hester Peirce argued that the agency should not treat DAOs under the purview of the securities-defining Howey test if they’re “sufficiently decentralized,” as they are not identifiable and are not a coordinated group.

Instead, the pair said DAOs should be treated as individuals or a group of persons unless proved otherwise

“If a DAO has a dispersed collection of tokenholders who have the opportunity to actively participate in and govern the DAO and the network, it is sufficiently decentralized such that neither the network token for that DAO, nor transactions in which that network token are the object, should be considered a security.” the letter read.

The letter was issued in response to Peirce’s Feb. 21 statement, which invited comments on crypto.

Favorable regulatory environment

The SEC has flipped on its crypto enforcement actions under the Trump administration, which successfully installed the former crypto lobbyist Paul Atkins to lead the agency.

Atkins has stated that blockchain technology could usher in new forms of market activity.

Related: Crypto vulnerable if CFTC not given authority, says ex-chair Behnam

The following week, Atkins said that the regulator would not stifle innovation and lambasted the Biden administration’s approach to crypto.

In a May 20 SEC oversight hearing, Atkins confirmed that the Crypto Task Force’s first report will be released in the next few months, the group is also holding a series of crypto-related roundtable discussions with industry players.

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